LASACO Assurance Plc is planning to raise additional N10 billion capital from its existing shareholders and new ones, as part of plans to attain a Tier 1 status, under the new Tier-Based Minimum Solvency Capital (TBMSC).The company plans to raise the additional capital through public offer, special placement or right issues and preference shares.
Already, the Insurance firm has N5 billion from its existing 10 billion shares, with plan to create additional 10 billion shares at 50 kobo per share, translating to a new N5 billion to be raised through public offer, special placement or right issues.Moreover, LASACO Assurance intends to raise another additional N5 billion from its proposed 10 million preferential shares at N500 per share, thereby, bringing the expected funds to be raised to a total of N10 billion.
Speaking at the Extra Ordinary General Meeting (EGM) of the company in Lagos, the Chairman, Mrs. Aderinola Disu, said the tier-based recapitalisation exercise being initiated by the National Insurance Commission(NAICOM) was responsible for the move to upgrade its capital base, which would help it to play at top levels of the sector.
While addressing the shareholders at the event, she urged the shareholders to authorise “the board, subject to the approval of the relevant regulatory authorities, to raise additional capital through the issuance of up to 10 billion ordinary shares of 50k each at 50k per share either by way of public offering, special placement or rights issue and/or up to 10 million preference shares of 1,000 each at N500 per share.’’ .
The board had earlier, proposed to raise its Authorised Share Capital from 10 billion to 50 billion, with the creation of additional 40 billion authorised shares, which the shareholders vehemently rejected, thereby, calling for amendment to reduce the volume of authorised shares to be created to 10 billion with the addition of 10 million preferential shares.
The founder of Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, advised the company to adopt the option of preferential shares, while reducing its ordinary shareholders, saying it would allow shareholders get good returns on investments, especially, through the preferential shares. The board of directors of the firm later agreed to this, thereby, amending the Special Business of the meeting to include the aforementioned plan.
Under the TBMSC, insurance industry is divided into three. Tier One is for the highly capitalised operators; Tier Two is for fairly capitalised underwriters, while Tier Three is for the least capitalised firms.With LASACO Assurance being a composite insurance company, it would have to raise its capital base from N5 billion to N15 billion to operate in Tier One class of the industry, which was the reason for the additional N10 billion call.